Correlation Between Bonny Worldwide and XAC Automation

Can any of the company-specific risk be diversified away by investing in both Bonny Worldwide and XAC Automation at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bonny Worldwide and XAC Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bonny Worldwide and XAC Automation, you can compare the effects of market volatilities on Bonny Worldwide and XAC Automation and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bonny Worldwide with a short position of XAC Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bonny Worldwide and XAC Automation.

Diversification Opportunities for Bonny Worldwide and XAC Automation

-0.36

Correlation Coefficient

Bonny Worldwide  XAC Automation

Very good diversification

The 3 months correlation between Bonny and XAC is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bonny Worldwide and XAC Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAC Automation and Bonny Worldwide is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bonny Worldwide are associated (or correlated) with XAC Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAC Automation has no effect on the direction of Bonny Worldwide i.e., Bonny Worldwide and XAC Automation go up and down completely randomly.

Pair Corralation between Bonny Worldwide and XAC Automation

Assuming the 90 days trading horizon Bonny Worldwide is expected to generate 1.76 times more return on investment than XAC Automation. However, Bonny Worldwide is 1.76 times more volatile than XAC Automation. It trades about 0.11 of its potential returns per unit of risk. XAC Automation is currently generating about 0.02 per unit of risk. If you would invest  5,760  in Bonny Worldwide on October 9, 2024 and sell it today you would earn a total of  24,290  from holding Bonny Worldwide or generate 421.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bonny Worldwide  vs.  XAC Automation

Bonny Worldwide

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bonny Worldwide are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bonny Worldwide showed solid returns over the last few months and may actually be approaching a breakup point.

XAC Automation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XAC Automation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, XAC Automation is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Bonny Worldwide and XAC Automation

The main advantage of trading using opposite Bonny Worldwide and XAC Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bonny Worldwide position performs unexpectedly, XAC Automation can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in XAC Automation will offset losses from the drop in XAC Automation's long position.

The idea behind Bonny Worldwide and XAC Automation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.